Shareholders' Equity

12 Months Ended

Dec. 31, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

13. Shareholders' Equity

Preferred Stock

At December 31, 2011, 638,353 shares of 7.375% Series D ESOP convertible preferred stock were outstanding, compared with 686,696 shares outstanding at December 25, 2010. The Series D ESOP convertible preferred stock is shown in the Consolidated Balance Sheets at its liquidation preference of $45 per share. All shares outstanding have been allocated to participants in the plan. Each ESOP preferred share is entitled to one vote, bears an annual cumulative dividend of $3.31875 per share and is convertible at any time by the trustee to 0.82168 share of common stock per share of preferred stock. The ESOP preferred shares may not be redeemed for less than the liquidation preference.

Common Stock

The Company is authorized to issue 200,000,000 shares of common stock, of which 86,158,662 shares were issued and outstanding at December 31, 2011. Of the unissued shares, 10,960,412 shares were reserved for the following purposes:

Conversion or redemption of Series D ESOP preferred stock	524,521
Issuance under 2003 OfficeMax Incentive and Performance Plan	9,619,788
Issuance under Key Executive Stock Option Plan	744,000
Issuance under Director Stock Compensation Plan	7,475
Issuance under Director Stock Option Plan	5,000
Issuance under 2001 Key Executive Deferred Compensation Plan	2,441
Issuance under 2003 Director Stock Compensation Plan	57,187

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) includes the following:

	Pension and Postretirement Liability Adjustment			Foreign Currency Translation Adjustment			Unrealized Hedge Loss Adjustment			Accumulated Other Comprehensive Income (Loss)
	(thousands)
Balance at December 26, 2009	$	(253,179	)	$	120,664		$	—		$	(132,515	)
Current-period changes, before taxes		27,263			21,290			(1,233	)		47,320
Income taxes		(10,907	)		—			349			(10,558	)
Balance at December 25, 2010	$	(236,823	)	$	141,954		$	(884	)	$	(95,753	)
Current-period changes, before taxes		(144,236	)		(6,195	)		1,435			(148,996	)
Income taxes		55,482			—			(394	)		55,088
Balance at December 31, 2011	$	(325,577	)	$	135,759		$	157		$	(189,661	)

Share-Based Payments

The Company sponsors several share-based compensation plans, which are described below. The Company recognizes compensation expense from all share-based payment transactions with employees in the consolidated financial statements at fair value. Compensation costs related to the Company's share-based plans were $16.7 million, $13.2 million and $8.5 million for 2011, 2010 and 2009, respectively. Compensation expense is generally recognized on a straight-line basis over the vesting period of grants. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $6.5 million, $5.1 million and $3.3 million for 2011, 2010 and 2009, respectively.

2003 Director Stock Compensation Plan and OfficeMax Incentive and Performance Plan

In February 2003, the Company's Board of Directors adopted the 2003 Director Stock Compensation Plan (the "2003 DSCP") and the 2003 OfficeMax Incentive and Performance Plan (the "2003 Plan," formerly named the 2003 Boise Incentive and Performance Plan), which were approved by shareholders in April 2003. At December 31, 2011, a total of 57,187 shares of common stock were reserved for issuance under the 2003 DSCP, and a total of 9,619,788 shares of common stock were reserved for issuance under the 2003 Plan.

The 2003 Plan was effective January 1, 2003, and replaced the Key Executive Performance Plan for Executive Officers, Key Executive Performance Plan for Key Executives/Key Managers, Key Executive Stock Option Plan ("KESOP"), Key Executive Performance Unit Plan ("KEPUP") and Director Stock Option Plan ("DSOP"). No further grants or awards have been made under the Key Executive Performance Plans, KESOP, KEPUP, or DSOP since 2003.

The Company's executive officers, key employees and nonemployee directors are eligible to receive awards under the 2003 Plan at the discretion of the Executive Compensation Committee of the Board of Directors. Eight types of awards may be granted under the 2003 Plan, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares, annual incentive awards and stock bonus awards.

Restricted Stock and Restricted Stock Units

Restricted stock is restricted until it vests and cannot be sold by the recipient until its restrictions have lapsed. Each restricted stock unit ("RSU") is convertible into one share of common stock after its restrictions have lapsed. No entries are made in the financial statements on the grant date of restricted stock and RSU awards. The Company recognizes compensation expense related to these awards over the vesting periods based on the closing price of the Company's common stock on the grant dates. The Company calculates the grant date fair value of the RSU awards by multiplying the number of RSUs by the closing price of the Company's common stock on the grant date. If these awards contain performance criteria the grant date fair value is set assuming performance at target, and management periodically reviews actual performance against the criteria and adjusts compensation expense accordingly. In 2011, 2010 and 2009, the Company recognized $5.6 million, $8.0 million and $6.1 million, respectively, of pre-tax compensation expense and additional paid-in capital related to restricted stock and RSU awards. The remaining compensation expense to be recognized related to outstanding restricted stock and RSUs, net of estimated forfeitures, is approximately $2.0 million. The remaining compensation expense is to be recognized through the first quarter of 2014.

A summary of restricted stock and RSU activity for fiscal years 2011, 2010 and 2009 is presented in the following table:

	Shares			Weighted-Average Grant Date Fair Value Per Share
Nonvested, December 27, 2008		2,258,961		$	31.07
Granted		800,828			5.08
Vested		(496,813	)		5.65
Forfeited		(633,031	)		5.24
Nonvested, December 26, 2009		1,929,945		$	16.24
Granted		872,534			13.81
Vested		(1,492	)		33.70
Forfeited		(689,852	)		20.34
Nonvested, December 25, 2010		2,111,135		$	13.89
Granted		648,224			12.17
Vested		(1,047,406	)		15.77
Forfeited		(223,703	)		11.64
Nonvested, December 31, 2011		1,488,250		$	12.15

Restricted stock and RSUs are not included as shares outstanding in the calculation of basic earnings per share, but are included in the number of shares used to calculate diluted earnings per share as long as all applicable performance criteria are met, and their effect is dilutive. When the restriction lapses on restricted stock, the par value of the stock is reclassified from additional paid-in-capital to common stock. When the restriction lapses on RSUs, the units are converted to unrestricted shares of our common stock and the par value of the stock is reclassified from additional paid-in-capital to common stock. Unrestricted shares are included in shares outstanding for purposes of calculating both basic and diluted earnings per share. Depending on the terms of the applicable grant agreement, restricted stock and RSUs may be eligible to accrue all dividends declared on the Company's common stock during the vesting period; however, such dividends are not paid until the restrictions lapse.

Stock Units

The Company previously had a shareholder approved deferred compensation program for certain of its executive officers that allowed them to defer a portion of their cash compensation. Previously, these executive officers could allocate their deferrals to a stock unit account. Each stock unit is equal in value to one share of the Company's common stock. The Company matched deferrals used to purchase stock units with a 25% Company allocation of stock units. The value of deferred stock unit accounts is paid in shares of the Company's common stock when an executive officer retires or terminates employment. There were 2,441 and 3,889 stock units allocated to the accounts of these executive officers at December 31, 2011 and December 25, 2010, respectively. As a result of an amendment to the plan, no additional deferrals can be allocated to the stock unit accounts.

Stock Options

The Company's stock options generally are issued at a price equal to fair market value on the grant date and typically expire within seven years of the grant date. Stock options granted under the OfficeMax Incentive and Performance Plan generally vest over a three year period. In 2011, 2010 and 2009, the Company recognized $11.1 million, $5.2 million and $2.4 million, respectively, of pre-tax compensation expense and additional paid-in capital related to stock options. The remaining compensation expense to be recognized related to outstanding stock options, net of estimated forfeitures, is approximately $8.3 million. The remaining compensation expense is to be recognized through the first quarter of 2014.

A summary of stock option activity for fiscal years 2011, 2010 and 2009 is presented in the following table:

	2011					2010					2009
	Shares			Wtd. Avg. Ex. Price		Shares			Wtd. Avg. Ex. Price		Shares			Wtd. Avg. Ex. Price
Balance at beginning of year		4,313,290		$	16.52		3,249,773		$	15.14		1,495,795		$	31.95
Options granted		1,457,280			13.33		2,060,246			16.24		2,071,360			4.77
Options exercised		(405,988	)		4.80		(408,519	)		4.80		—			—
Options forfeited and expired		(548,030	)		13.80		(588,210	)		16.02		(317,382	)		26.70
Balance at end of year		4,816,552		$	16.86		4,313,290		$	16.52		3,249,773		$	15.14
Exercisable at end of year		2,122,136					1,301,257					1,225,646
Weighted average fair value of options granted (Black-Scholes)	$	7.07				$	8.08				$	2.63

The following table provides summarized information about stock options outstanding at December 31, 2011:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Options Outstanding		Weighted Average Contractual Life (Years)		Weighted Average Exercise Price		Options Exercisable		Weighted Average Exercise Price
$2.50		11,171		—	$	2.50		11,171	$	2.50
$4.00 – $7.00		1,192,317		4.8		4.99		506,227		4.72
$10.00 – $16.00		813,274		5.2		14.13		264,738		14.51
$16.00 – $17.00		809,790		6.1		16.86		—		—
$18.00 – $19.00		975,000		5.9		18.15		325,000		18.15
$24.00 – $37.00		1,015,000		0.9		31.89		1,015,000		31.89

At December 31, 2011, the aggregate intrinsic value was less than $1.0 million for both outstanding stock options and exercisable stock options. The aggregate intrinsic value represents the total pre-tax intrinsic value (i.e. the difference between the Company's closing stock price on the last trading day of the fourth quarter of 2011 and the exercise price, multiplied by the number of in-the-money stock options at the end of the quarter).

In 2011, the Company granted stock options for 1,457,280 shares of our common stock and estimated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 1.92%, expected life of 4.5 years and expected stock price volatility of 65.17%.

In 2010, the Company granted stock options for 2,060,246 shares of our common stock and estimated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 2.12%, expected life of 3.7 years and expected stock price volatility of 67.21%. In 2009, the Company granted stock options for 2,071,360 shares of our common stock and estimated the fair value of each stock option award on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions: risk-free interest rate of 2.2%, expected life of 3.0 years and expected stock price volatility of 87.3%. The risk-free interest rate assumptions are based on the applicable Treasury bill rates over the options' expected lives; the expected life assumptions are based on the time period stock options are expected to be outstanding based on historical experience; and the expected stock price volatility assumptions are based on the historical and implied volatility of the Company's common stock.